Changes fees charged by lenders

House Bill 545 amends Louisiana Revised Statutes 9:3519(A) and 3530(A)(1) to increase the maximum finance charges and origination fees that licensed lenders and supervised financial organizations may charge on consumer loans. The bill restructures the tiered annual percentage rate caps for consumer loans other than credit card loans by raising the threshold amounts at which lower rates apply. Under the amended structure, lenders may charge up to 36 percent per year on the unpaid principal amount not exceeding ten thousand dollars, 27 percent per year on amounts exceeding ten thousand dollars but not exceeding twenty thousand dollars, and 24 percent per year on amounts exceeding twenty thousand dollars. Additionally, the bill increases the maximum origination fee that lenders may charge on a consumer loan or revolving loan account from fifty dollars to seventy-five dollars.

The practical effect of this legislation is to increase the cost of borrowing for Louisiana consumers across different loan sizes. Consumers borrowing between fourteen hundred dollars and ten thousand dollars will face higher maximum allowable annual finance charges under the new tiered structure, as the 36 percent rate now applies to loans up to ten thousand dollars instead of fourteen hundred dollars. For smaller loans, this change expands the loan amount subject to the highest rate tier. Borrowers taking out consumer loans and revolving accounts will also pay an additional twenty-five dollars in maximum permissible origination fees. Licensed lenders and supervised financial organizations operating in Louisiana gain additional revenue capacity through both the expanded higher-rate tier and the increased origination fee ceiling.

These amendments operate within Louisiana's consumer credit regulatory framework, which establishes maximum permissible charges that lenders may impose regardless of market conditions or competitive pressures. The existing law in R.S. 9:3519 and 3530 establishes the constitutional outer limits of what licensed entities may charge Louisiana consumers for consumer credit. This bill represents a legislative determination to increase those limits, thereby allowing greater profitability on consumer lending while maintaining the statutory ceiling structure that prevents unlimited charges. The changes apply to all licensed lenders and supervised financial organizations throughout Louisiana operating in the consumer loan market, except for credit card lending which operates under separate rate provisions.